Thoughts! May 31, 2014

Thoughts! – Altacit Global’s E-Newsletter

Pradeep Cholayil discusses why natural, ayurvedic products is at the core of what his company does.

Pradeep Cholayil is a man of few words. But, once he starts talking about his company’s brands – Medimix, Cuticura and Krishna Thulasi – his passion takes over. He rattles out why his company would never build a me-too brand, the single-minded focus on launching only natural (or ayurvedic) personal care products and why every product of his, has a backstory that customers should be aware of. Pradeep says, quite simply, “The three crucial aspects of building a good FMCG company are product quality, distribution and marketing inputs.” He, of course, is no stranger to the FMCG world or, for that matter, the world of Ayurveda.Pradeep belongs to the family that created one of South India’s early Ayurvedic soap brands – Medimix. The Chennai-based Cholayil Group launched the soap in 1969 and the product made tremendous progress in Southern India becoming the market leader (in the ayurvedic soap category) in the region. In 2007, there was a split in the family and the business was separated into two entities – AVA Cholayil Health Care that got the marketing rights for Medimix for the southern markets and Cholayil Pvt. Ltd, spearheaded by Pradeep Cholayil, the son of the founder, that got the rights for rest-of-India and international markets.Over the last six years, Pradeep has focused on implementing several strategies for growth. In August last year, he expanded the Medimix product portfolio by launching a face wash and plans to launch a shower gel and hand wash soon. The company also worked consciously on appointing distributors for the rest of India and global markets and set up sales and distribution channels in the 25 countries it sells in. In 2011, the company acquired another soap brand, Krishna Thulasi, from Kerala-based Krishna Herbals. Cholayil also holds the India marketing and sales rights for Cuticura, a talcum powder and deodorant brand that sells well in Kerala and parts of Tamil Nadu. Going forward, the company plans to raise Rs. 50 crore in funding, primarily to market these brands.Ayurvedic legacyThere is a story behind Cholayil’s deep focus on natural, herbal products. Pradeep explains that his forefathers were Ayurvedic physicians in Kerala and his father, Dr. V.S. Sidhan, was an allopathic doctor with the Indian Railways. At the time, several people would visit Dr. Sidhan with skin problems and he would turn to his ayurvedic knowledge to suggest a treatment. In late 1969, Dr. Sidhan decided to turn entrepreneur and launch Brand Medimix, which was manufactured in the backyard of his house. Over time, the brand scaled up and became the world’s largest selling Ayurvedic soap brand. Today, Cholayil (the division headed by Pradeep) manufactures over 6000 tonnes of soap, across its factories in Haridwar (Uttrakhand) and Tada (Andhra Pradesh).

Additionally, the company did a backward integration and operates a factory to procure coconut oil (the primary oil used in Medimix) in Kangeyam (Tamil Nadu).

Pradeep says, “After the split, we had a few teething problems in our factory in Haridwar. In the early days of operations, we wasted over 300 tonnes of soap. But we’ve now carefully sorted out all these problems.” He adds, almost philosophically, “Sometimes, even well thought out decisions can backfire. But it should be taken as a stepping stone to success.”

Pradeep understands the Ayurvedic FMCG business very well. He joined the business in the early 1980s and learned the ropes of building a personal care company that tapped into the benefits of Ayurveda. He says, “The most interesting aspect of our brand is that each of our products has a story. More importantly, the herbs and other natural ingredients we use have been tried and tested for several years.” When Pradeep interacts with his creative team and advertising agency, he often emphasizes on bringing out the backstory and the advantages of using the right ingredients.

Distribution is king

As is often repeated by experts, distribution is king for any FMCG brand. Pradeep is deeply aware of this aspect and grapples day-in and day-out about expanding the availability of his brands. The company is in talks to expand its retail presence from seven lakh to eight lakh outlets, in India. Over the next five years, Pradeep wants to expand across product categories and make all his products available across the north, west, eastern and the Southern (except Medimix in the South) regions of India.

Additionally, Cholayil is present in several international markets including Korea, Taiwan, Middle East, Malaysia, Singapore and Lithuania. “Early indicators are, our Medimix product line will do well in each of these markets. One key aspect we’re looking at (as we go international) is our foray into the body wash segment. The market – both in India and abroad – is moving away from bar soaps into shower gels,” he says. While retaining the three variants (classic, dry skin, and sandal) of the Medimix brand, Pradeep is now working towards having the same variants in the shower gel category. The company launched the Medimix Face Wash, Medimix Khus Prickly Heat Talc and Watermelon Prickly Heat Talc to expand its product mix.

In addition to all the FMCG products and brands, Pradeep also manages Dr. Sidhan’s Herbal Formulations Private Limited, a division that sells a range of pharmaceutical products to ayurvedic doctors (and some allopathic doctors). Pradeep’s father personally formulated all the products in this division by looking at the Aurvedic text and today, Pradeep manages this division as well with utmost care.

From an expansion perspective, the other method adopted by Pradeep was to scale Cholayil through acquisitions. Both his acquisitions – Cuticura and Krishna Thulasi – were pure brand/intellectual property acquisitions. With Cuticura, he bought the formulae and sales rights for India. With Krishna Thulasi, the idea was to expand his brand portfolio and be present in the Southern market, but even here Cholayil did not buy factories or people. “It was a pure acquisition of intellectual property- brand, sales rights and product formulae,” emphasizes Pradeep.

Diversification

Pradeep is also working on a related diversification from the Cholayil stable. He’s launched an Ayurvedic treatment center under the brand “Sadayush Cure and Care”. The first center is located in Chennai and the company is launching a second center in the outskirts of the city. The new center is being positioned as a residential Ayurveda treatment center, where people can come and stay and enroll in short and long-term treatments.

Pradeep says, over the next five years, we can expect several interesting and innovative offerings from the Cholayil stable. “But whatever we do, the focus is on natural products. The goal is to never launch a me-too brand and make sure all our products are innovative and interesting,” he says on a parting note.

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